Remote work, not AI, is driving a surge in youth unemployment, according to Federal Reserve research

The unemployment rate for college graduates younger than 29 climbed from 3.1% to 3.7% over the past nine years, while unemployment among college graduates older than 29 ticked down from 1.9% to 1.8%, according to Federal Reserve Bank of New York researchers. Remote work could account for as much as 64% of the overall rise in youth unemployment since the pandemic.

In jobs that require physical presence (like nursing), the age unemployment gap spiked briefly in 2020 then normalized. In remote-eligible work (software engineering, financial analysis), the gap never normalized. A separate study found feedback on coding work increased 18.3% when workers were in the office, with younger workers disproportionately benefiting from in-person mentorship.

Of jobs that could be done remotely, 78% of U.S. work locations are currently either remote or hybrid, up from 40% in 2019. Companies that publicly announced strategy shifts towards working from home or hybrid models early in the pandemic are now more likely to staff senior roles and older workers, with fewer entry-level roles available.